Israeli Prime Minister Ehud Olmert said on Sunday that the United States has agreed a 25 percent rise in its military and defense aid to Israel, to 30 billion dollars in the next 10 years. "In my last meeting with the president of the United States, we agreed that the aid would stand at 30 billion dollars over the next 10 years, meaning over three billion dollars a year, starting next year," he said at the start of his weekly cabinet meeting.

"This is an increase of over 25 percent in the military and defence aid of the United States to Israel," he added, according to the AFP.

Olmert described the new package as a considerable improvement and a very important element for the security of Israel. US President George W. Bush, whom Olmert last met in Washington on June 19, gave him assurances "to keep the qualitative edge between us (Israel) and the other states (in the region)," the Israeli premier said.

"Other than the increase in aid, we received an explicit and detailed commitment to guarantee Israel's qualitative advantage over other Arab states.

"We understand the United States' desire to help moderate states which stand at a united front with the United States and Israel in the struggle against Iran," he added.

A senior US defence official said on Saturday that Washington is readying a major arms package for Saudi Arabia with an eye to countering the changing threat from Tehran, Israel's arch foe.

Israel has reacted cautiously to the reported Saudi package. "We have no doubt that the United States would not do anything that could endanger the security of Israel," Olmert's spokeswoman Miri Eisin told AFP on Sunday.